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Land Bank Revenues Sharply Down

Martha's Vineyard Land Bank revenues fell some 14 per cent in
the fiscal year just ended, as a result of the downturn in the Island
real estate market.

As it closed the books on the fiscal year yesterday, the land bank
reported revenues for the year ending June 30 were just under $11.1
million, compared with a little over $12.9 million the year before.

The public conservation organization's funding comes from a
two per cent fee charged on most Vineyard real estate transactions,
making it a good indicator of the state of the residential real estate
market on the Island. Land bank revenues are used to buy and manage land
for conservation, preservation and public use.

For the second successive year, the number of sales fell. They
declined some seven per cent in fiscal year 2006 to 1,551 and fell again
last year by eight per cent, to 1,430.

Land bank executive director James Lengyel said yesterday the
decline in revenues comes as no surprise to the organization and does
not affect its plans.

"We had projected a 15 per cent decline this year, so it was
spot on," Mr. Lengyel said. He continued:

"We foresaw a general slowdown a year ago. After years of
stability in the number of transactions, we saw a drop last year [2006]
for the first time. It was a seven per cent fall. We took that at the
time to be the leading edge of an impending small decline and planned
accordingly.

"Our thinking related to a couple of things. One was just the
natural real estate cycle. We go on the theory that here is something
akin to an eight-year cycle. Maybe it's as small as five years,
maybe it's nine years, but it somewhere around there. We thought
it was time for the natural cycle to expose itself. And it did.

"Also, just from our own observations as an institution we
thought the market was getting ready to purge some of the more assertive
pricing. And that seems to be happening as well."

The figures certainly point to it. In 2006, land bank revenue
actually increased 14 per cent, even though the number of transactions
declined. There were fewer sales, but on average they were for more
money, suggesting pricing remained strong, especially at the upper end
of the market.

This year the situation was quite different. Both transactions and
revenue were down, and revenue was down more sharply, meaning a lower
average price.

"That [change] was remarkable," Mr. Lengyel said.
"Here you see that the market in general was affected."

Given the land bank's apparent success in predicting the
future of the market, is it projecting another revenue decline in the
coming year, or has the cycle reached the bottom?

"That is not necessarily a reflection on the market so much as
on the land bank's institutional philosophy of good conservative
fiscal planning, but we're not prepared from the land bank's
perspective to assume the market's ready to recover."